Mortgage applications rose nearly 20 percent in December from a year ago and people are also taking out more personal loans, in what personal credit rating agency Veda says proves the economy is recovering.

The agency sees 98 percent of all credit applications and says it is evidence of a revitalised credit cycle and indicates New Zealanders are increasingly confident about the economy.

"We can talk ourselves out of feeling good or we can read the numbers, and I say the New Zealand economy is picking up and New Zealanders know it," Veda managing director John Roberts says in a statement.

A 19.71 percent rise in mortgage applications in December from the same month a year ago reflected not only a strong housing market but also strong competition among banks, which have reduced fixed-term rates, in particular.